Part D: The following extract describes what happened in the United States just after 1945 when the first ballpoint pens began to appear on the market. As you read, consider why Reynolds International Pen Company made large prots from ballpoint pens-as high as S 500. 000 a month - and why after 1951 their manufacture as \"only ordinarily protable\". In 1945, Milton Reynolds developed a new type of pen that wrote with ball bearing rather than conventional nib. He formed the Reynolds International Pen Company, capitalized at S 26, 000, and began production on October 6'", 1945. The Reynolds pen was introduced with a good deal of fanfare by Gimbels (A New York department store) which guaranteed that the pen would write for two years with refilling. The price as set at 5 12.50 [the maximum price allowed by the wartime Ofce of Price Administration). Gimbels sold 10. 000 pens on October 6, 1945, the rst day they were on sale. In the early stages of production, the cost of production was estimated to be around 5 0.80 per pen. The Reynold International Pen company quickly expanded production. By early 1946, it employed more than 800 people in its factory and was producing 30, 000 pens per day. By March 1946, it had 5 3 million in the bank. Macy's Gimbels' traditional rival, introduced an imported ballpoint pen from South America. Its price was 5 19.98, its production cost are unknown. The heavy sales quickly elicited a response from other pen manufactures. Eversharp introduced its rst model in April, priced at S 15. In July 1946, Fortune magazine reported that Sheaffer was planning to put out a pen at S 15 and Eversharp announced its plan to produce a "retractable\" model priced at S 25. Reynolds introduced a new model but kept the price at 5 12.50. The estimated production cost of the new model at S 0.60 per pen. The rst signs of trouble emerged. The Ball Point Company of Hollywood put a S 9.95 model on the market, and a manufacturer named David Kahn announced plans to introduce a pen selling for less than 5 3. Fortune reported fears of an impending price war in view of growing number of manufactures and the low cost of production. In October, Reynolds introduced a new model, priced at S 3.85. that cost 5 0.30 to produce. By Christmas 1946, approximately 100 manufactures were in production, some of them selling pens for as little as S 2.98. By February 1947, Gimbels was belling a ball point pen made by Continental pen Company for 5 0.98. Reynolds introduced a new model priced to sell at$ 1.69, but Gimbels sold it for$ 0.88 in price war with Macy's. Reynolds felt betrayed by Gimbels. Reynolds introduced a new model listed at S 0.98. By this time, ballpoint pens had become economy rather luxury items, but they were still highly protable. In mid-1948. ballpoint pens were selling for as little as S 0.39 and costing 5 0.10 to produce. In 1951, prices of S 0.25 were common. Within six years, the power of monopoly was gone forever. Ever since then, the market has been saturated with a wide variety of models and prices of pen ranging from S 0.19 up. The manufacture is only ordinarily protable. a. What characteristics dened Milton Reynolds's production of ballpoint as monopoly? (Thinking/Inquiry: 2 Marks) b. What was the cost of production and the selling price of the rst Reynolds ball point pens? (Knowledge/Understanding: 2 Marks) Why was there such a wide disparity between cost and price at rst? (Thinking/inquiry: 2 Marks) d. Since 1945, what has happened to the price of ballpoint pens? Explain why. [Thinking/Inquiry: 2 Marks) e. How as Reynolds International Pen Company's monopoly broken? (Thinking/Inquiry: 2 Marla) Suppose Reynolds has been able to keep other rms out of the ballpoint pen business. What difference would it have made? Why? (Thinking/Inquiry: 2 Marks) g. Suggest another product with similar price history to that of the ballpoint pen. Did the industry begin as a monopoly? Explain what happened. (Thinking/Inquiry: 2 Marks} 5" H